Why tech start-ups (and giants) should leave London (and move to Newcastle)

I think tech start-ups (and giants) should leave London and move to other parts of the UK. I also think the UK Government should stop putting all their eggs in one basket (i.e. Tech City / Silicon Roundabout) and give greater support (media attention, funding and financial incentives) to other tech clusters around the country to help spread the economic and social benefits more evenly.

Geographical location really shouldn’t matter if you’re a UK tech start-up. In fact, I’d go so far as to say that you are greatly reducing your chances of survival as a start-up if you base yourself in London. Yes, I know that’s where all the money and investors are, but the rents and living expenses down there are too high, competition for resources, attention and talent is intense (not to mention expensive) and you’ll burn through what little money you do have much faster than if you run your operation from elsewhere.

Living and working in Gateshead and Newcastle upon Tyne (in the North East of England for those that don’t know) for Shell LiveWIRE (one of the UK’s biggest and longest running youth enterprise schemes), means I can speak with some authority when I say that you don’t need to be based in London to run a successful national operation. Our overheads and staff salaries are much lower than if we were based in London so the money goes much further – providing better value for money to our sponsor (Shell) and allowing us to give away more start-up funding to the young entrepreneurs that we serve (48 x £1,000 start-up awards throughout the year and a further £10,000 in November). Furthermore, with a wife who once worked in London and many other friends who are still down there (or who have ‘escaped’ back home) I can tell you that unless you are making a ton of money in London, the quality of life up here is much higher with shorter commutes into work, bigger houses than you could afford in the capital, all the shops, bars, restaurants and cultural activities you need, plus all the beautiful beaches and countryside on our doorstep.

Running a national enterprise scheme means we do need to be in London a lot as that’s where many of the key decision-makers, events and meetings are but we are primarily an online service with clients/website users/award winners from across the UK which means we could really be based anywhere in the country. However, an office in the North East means that we’re well-placed to attend regional events across the UK and are able to understand and empathise with start-ups, wherever they are based and aren’t at all biased towards London. Many of our partner organisations also seem to like the fact that we’re not based in London too. If you’re a tech start-up founder, I see no reason why your office, developers and core team can’t be based somewhere like Newcastle (or anywhere other than London really), with you spending time in London only when you really need to be there for meetings and networking.

Transport infrastructure

When it comes to transport, Newcastle has great bus, Metro and train networks. London is just a 3hr train ride away so you can feasibly be there and back in a day (I can be sat working at TechHub, Google Campus or Central in around 31/2hrs door to door) although I tend to make an overnight stay and plan my meetings across the two days when I’m there. Living on a small island like Britain means people often have a distorted sense of distance (especially Londoners) which is silly really when you talk to people from the US who regularly commute 5-6hrs from one side of the county to the other.

Being on the East Coast Mainline means that it’s easy to get to large parts of the country (main destinations include London, Peterborough, Doncaster, Leeds, York, Newcastle, Edinburgh and Glasgow with various stops in-between. Meanwhile, the Transpennine Express has regular departures to the West of the country calling at major cities Manchester and Liverpool. Road links in all directions are pretty good too (although could the main roads into Scotland could still be improved), Newcastle International Airport has direct routes throughout Europe, Egypt and Tunisia and connecting flights to London Heathrow and Gatwick. The nearby, award-winning Port of Tyne is also one of the UK’s busiest handling a huge amount of imports and exports not to mention regular cruises and ferries to Scandinavia, Netherlands, Germany and France.

City living

Ok, but what’s it actually like to live in Newcastle? Well, I’d describe it as a ‘big, small city’. Large enough to keep you interested and discovering new things all the time but small enough that you can walk around it and feel like it’s somewhere you can really belong and make a difference. There’s something to suit most tastes and interests with all the major high street brands, high-end fashion outlets and local independent fashion retailers. There’s also a vibrant nightlife of pubs, bars and clubs, great arts and culture scene and some of the British Isles’ most beautiful wildlife, countryside and beaches just a short drive away, not to mention the abundance of castles and cathedrals and Roman-built Hadrian’s Wall (a World Heritage Site don’t you know)! The Geordies (and nearby Mackems of Sunderland) are renowned for their friendly, hospitable nature and if you’re into your football you won’t find anywhere more passionate than the North East which is home to 3 hugely supported clubs Newcastle United, Sunderland AFC and Middlebrough FC.

Local tech community

There’s a thriving grass-roots community of tech start-up founders, developers and designers all working together to support each other and build great things in the region. It’s very easy to get involved through weekly, after-work get togethers like the PHPNE, Ruby North East, Design Interest and Javascript North East events that occur at the PostOffice (opposite Central Station) every Tuesday night and numerous others in Newcastle, Sunderland and Middlesbrough. In fact, the block of buildings on Pink Lane in which the PostOffice is housed is owned by local enterprise agency PNE Group (formerly known as Project North East) who have won European awards for their low-cost incubator workspace for start-ups since the early 80s, and was one of the first places in the country that offered high-speed internet access, earning it the nickname ‘Silicon Alley’.

Over the years, this part of town and PNE has attracted and supported 100s of first-class digital and creative start-ups, precisely because of these lower rents, higher internet speeds and clustering effect of similar like-minded businesses. Current tenants include innovative m-commerce app MobiCart and exciting new private sharing app Cupple. Just around the corner, on the other side of the block is PNE’s Adamson House where ignite100, ‘Europe’s first £1m tech accelerator programme’ is based (current crop of fantastic cohorts = Blooie, Usable, Odimax, Blink Collective, Givey, CrowdIPR, RentMama, ArtSpotter and PinorPeg) and whose loft space office also currently houses online artisan food market Loveyourlarder.com and Little Riot (makers of ‘Pillow Talk’) amongst others.

Indeed this ‘Tech Quarter’ is positively buzzing with tech start-up activity right now, and the nearby pubs The Town Wall, The Forth and BrewDog Bar are where many of the local movers and shakers can be found, alongside great little coffee shops like Pink Lane Coffee, Flat Caps Coffee and 9 Bar. In the East of the city, Hoults Yard, Ouseburn Valley and The Toffee Factory provide fantastic facilities for a wide range of digital, creative and media companies with Screenreach (on the verge of global greatness) being the most notable start-up of recent years.

On the Gateshead side of the River Tyne, we have the Sage Gateshead music and conference centre and Baltic centre for contemporary art which are the venues for the internationally renowned Thinking Digital Conference (my personal highlight event of the year), which is organised by digital events and membership organisation Codeworks. The awesome new Northern Design Centre is situated just around the corner and is home to leading local digital businesses like Ayo Media and New York-based mobile design and development agency Fueled. There’s a wide range of affordable workspace available there and throughout the city for businesses to move into right now which offer much, much more than you could dream of in London for far less money.

But it’s not just Newcastle. Organisations like Sunderland Software City and pioneering companies like The Leighton Group and SaleCycle are showing that the city is one of the best places in the country for a digital business to be based, whilst Spotify music resource Sharemyplaylists.com are rocking it with 2 million users of their website and app per month! Furthermore, the great work of organisations like Digital City at Boho One, plus grassroots events from Refresh Teesside and North East New Tech are all adding to the mix of what gives the North East such a vibrant tech community.

Sage

Then of course there is the awesome Sage. Founded in 1981, Sage has grown to be a world-renowned, FTSE100 company, providing desktop and cloud-based software for over 800,000 businesses in the UK, 6.3 million businesses worldwide and employing more than 13,000 people. Their headquarters are proudly still in Newcastle, on the outskirts of the city in a custom-built office which is arguably one of the best and most impressive in the world and as a former Sage employee (my first job after University between 1998-2000), I can vouch for them as being a fantastic place to work with founders who remain loyal and passionate about the North East.

Investors

There’s serious money available up here too. We have a range of proactive, Newcastle-based investors and angels like Northstar Ventures, Rivers Capital Partners, IP Group and more all looking to fund exciting and innovative businesses that create growth and jobs in the region. Newcastle City Council and Gateshead are also two of the most forward-thinking in the county and the local Universities, hospitals and science community are world-renowned for the pioneering work that they do.

Talent, opportunity and ambition

There is no shortage of talent, opportunity and ambition in Newcastle, Sunderland and Middlesbrough and the North East right now, with the region exporting more than any other in the UK and an exciting new renewable energy sector growing by the day.

As a region, we just need a little bit more belief in our abilities to compete on a global scale (although there’s no shortage of that amongst the tech start-up founders), and collective cooperation from everyone in the area to do their bit to push things forward. Personally, I’d like to invite more outside investment from London, European and US-based VCs into the area and see the local and national Government doing more to encourage large tech companies to open offices up here (British Airways have some of their core developer teams in Newcastle) to help create jobs, reduce unemployment and provide stimulus to the local economy.

The ambition of North East industrial pioneers like George Stephenson, Joseph Swan, William Armstrong and George Burton Hunter are what made Tyneside and in turn Britain great and we now need a new breed of ‘Tyneside Tech Titans’ to follow in their footsteps!

If you’re a tech start-up or tech giant and would like to know more about the opportunities for you and your business in Newcastle and the surrounding area, please email me at plandigital@live.co.uk or give me a call on +44(0)7734 722716 so I can put you in touch with the relevant people or help coordinate a visit.

25 thoughts on “Why tech start-ups (and giants) should leave London (and move to Newcastle)

  1. Unfortunately when VCs or Angels in vest they want board seats. That means physical meetings. That means not being 4 hrs drive away.

    • Hi Mike, thanks for taking the time to read and leave a comment. You’re totally right but how often do boards meet up? Once a month? No reason why a tech start-up can’t be based in Newcastle or anywhere really, and just have the founder down in London. Perhaps with a desk in TechHub / Google Campus?

      • Hi Mike, I’m on the board of 7 of our portfolio companies at present. Some Boards meet in London even if start-ups are based here in the North East. I just travel when I can and Skype when I can’t. Not a deal-stopper for us.

  2. Love it, having a successful career in the tech industry shouldnt have to mean moving 300 miles to the M4 Corridor (I have the former and did do the latter). Be great to see you reference Sunderland Software City and connect with those guys – they have a great agenda to drive a tech cluster not dissimilar to TechCity in London and can really help tech start ups access funding, mentoring, skills, and premises. Find out more here http://www.sunderlandsoftwarecity.com/home.html

    • Hi Ally, thanks for taking the time to read and comment also. Yes, you’re right. Sunderland Software City are doing some great things, as are Digital City / Boho One in Middlebrough. It’s not just Newcastle so I’ll amend and reference them too. The whole of the North East has a lot to offer as do other regions of the UK.

  3. Valid points on both sides of discussion here. A non-exhaustive list of recent London , European or US investors in NE founded or based technology businesses includes : Octopus, Amadeus, Prime Tech, Eden, Isis Equity , ePlanet Ventures , DFJ , Energy Ventures etc . I could go on… Yes, London dominates the UK ecosystem and any business that wants to scale must and should engage there. That’s why colleagues at Northstar spend a couple of days a week at boards in London. I think my pb from my own front door to Old St is 3 hours 25 mins. I could get 15 minutes off that from the office. The world is a very small place. If Kieron Donoghue of another great NE startup , Share My Palylists came on here he’d no doubt point out he spends more time in NYC than London. Still based here.

    Richard Exley , Nothstar Ventures (personal views)

    • Thanks for the mention Richard. As a North East based startup with investors based both here and in London we have no trouble having board meetings in both locations, in rotation. It’s a 3 hour train journey – no big deal.

      I’ve lived in the North East all of my life and I’m a die hard supporter of the region and what we are achieving up here. I honestly believe that there is nowhere outside of London doing as much as we are in terms of supporting and building an ecosystem for startups. Without even trying hard I can name a couple of dozen exciting tech businesses based here with real potential as well as a huge community building up around them. As Richard correctly states, I spend more time in New York than London yet I have no desire nor need to relocate away from the North East.

      • Cheers for reading and commenting Kieron. Yet again, you’re further proof of why you don’t need to be in London to be competing on the world stage. Great that you continue to be such a passionate and supportive chanmpion of the North East!

    • Thanks Richard. As one of the leading North East investors, your comment just proves why the region is a great place for tech start-ups to be based. If a founder has someone like you representing them in London and with access to all those other investors then that’s a mighty fine asset to have!

  4. Well said! I stated similar views when Prince Andrew visited Gateshead International Business Centre earlier this year. I also believe that Camerons unbalanced focus on Tech City has placed undue pressure on companies based there. Agree with your global point to, initiatives like the Northern Design Centre should be building a global profile not just a regional/national one.

    • Hi Chris, whereabouts are you based? Although my blog above was written about Newcastle and the North East, it could just have easily been about many other areas in the UK. My main point is that the UK economy is far too London-centric and modern technology means that it shouldn’t really matter where you are based if you are a tech/web-based business. Unless ALL your customers/users are in London and you rely on a physical presence (i.e. a shop, restaurant, bar) then you can be anywhere in the world.

  5. Isn’t this just what the governments did way-back-when for the distribution of various government agencies – such as DVLA, Inland revenue, Passports etc? I liked the concpets of what you were saying, but it came over as too much of a sales pitch to me, rather then an honest evaluation of the facts. good luck though!

    • Hi Adrian, the North East was once known as ‘the engine room of Britain’ due to all the heavy industry up here (coal mining, shipbuilding, steel, engineering, arms manufacturing) which literally fueled the economy and enabled the British Empire to grow and prosper.

      When heavy industry died out, successive Governments tried to appease the high levels of unemployment by relocating departments like HM Revenue & Customs up here and encouraging/incentivising companies like Nissan and more recently ‘call centres’ to move up here. This is/was a positive thing as it did provide jobs and has been good for the region on the whole.

      However, because the North East has become so heavily reliant on the Public Sector for jobs, it has been hit harder than most by the recent economic downturn as budgets have been cut leading to job losses and therefore less money being spent in the local economy. The Voluntary/Third Sector has also been dealt a double whammy because a large chunk of funding for good causes in the North East and Cumbria was provided by the truly excellent Northern Rock Foundation which through no fault of it’s own lost almost all of it’s money when Northern Rock Bank failed!

      It’s for these reasons that I am encouraging more private sector businesses, big and small, to consider re-locating to the area because they can not only save money but also help the UK-wide economy by spreading wealth more evenly across the country.

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  7. A new venture investor should be totally comfortable and briefed with knowledge and expectations of the local region where the business is run from. Newcastle / The NE is a major university cluster that is well outside, thus has some distinct difference from, but not entirely inaccessible to, the London economy. Any message to inform and encourage those investors willing to spread their wings into the region should be welcomed.

    Surely it’s not that bold a challenge for a venture investor to explore and harvest the potential of a more stable and affordable part of the country. However, due to lack of an efficient national transport grid, businesses at certain stage of development that require easier access to centeral, western & Southern parts of England to succeed would be at a disadvantage if they were based solely in the NE.

    • Hi Kai, thanks for taking the time to reply to my blog. The world-renowned Universities in the North East are a major reason why tech/technology based businesses should consider basing themselves in the region. Not only is there considerable expertise, research and testing facilities available in the Universities themselves, but initiatives like Newcastle Science City (http://www.newcastlesciencecity.com) have been specifically set up to help bridge the gap between the academic and business worlds so there is a lot of great work going on. There’s also the large and highly qualified student population which makes it easy for companies with ambition to find top class employees who already know and love the area.

      Regarding national transport, Manchester isn’t much closer to London than Newcastle. Basically 2-3hrs from Manchester vs. 3hrs from Newcastle. But my main argument is that in the modern, digital age there’s no reason why a tech-technology business can’t have their headquarters up here. In addition to Sage, one other HUGE example of a company with a long and proud history on Tyneside is Proctor & Gamble which became an international organisation with the acquisition of Newcastle’s Thomas Hedley Co. in 1930 (see http://en.wikipedia.org/wiki/Proctor_and_gamble)!

  8. I’m really impressed with the maturity of the comments here. I think that Newcastle – especially through Difference Engine and Ignite100 has been taking great steps to support startups and I imagine this has had a good effect on retaining technical skillsets, which quite often move to London.

    I like how people acknowledge the role of London. I don’t feel it’s an us vs them mentality. There’s a lot of great buzz in London. Central Working is fantastic! The critical mass isn’t present in any other area in the country. But wow, what a cost! Everyone should be visiting London – I don’t know how many times a year, but at least a couple of times, and from what people are saying here they are. Similarly maybe London isn’t central enough in Europe sometimes – I’ve yet to visit Berlin, but it seems to be the place to go to get collaborations off the ground.

    Manchester is embryonic in comparison, but there’s a lot of passion here. As you say, we are slightly closer to London ;) We’ve yet to get a major accelerator based here, but there’s many technology meetups and several startup meets too, and quite a lot of bootstrapping activity, as well as 3 universities producing a variety of graduates. The cost of office accomodation – £120 to £200 a month for a 2 man office is vastly cheaper than London. Similarly private accomodation is loads cheaper – like Newcastle, you might even aspire to own a home here one day.

    I love how people are getting out of there own local bubbles and talking to over parts of the country. Ignite100 have done multiple presentations in Manchester. Dublin Web Summit visited on their tour.

    I guess the lesson is build a local critical mass, and engage with those around you, but don’t get stuck in a local maximum and make sure you visit other regions regularly. One example of doing this to perfection I can think of is probably Joel and co from Buffer.

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